The allure of small town living — whether it be cheaper real estate prices or peace and quiet in the outdoors — continues to draw Canadian homebuyers. The demand for properties in smaller communities is creating a boom in local housing markets, a trend that could cause property prices to rise as high as 20 per cent in some areas this year.
This week, RE/MAX Canada released its 2022 Small Markets Report, which examines home sales and price patterns in Canada’s fastest-growing small housing markets, communities that have a population under 440,000 but reported the highest population growth rates in 2021.
All small markets analyzed in RE/MAX Canada’s report will see prices climb within the average range of three per cent to 20 per cent in 2022 thanks to low inventory and growing demand. Some small communities have already seen their prices jump between 17 per cent to 46 per cent year-over-year within the first business quarter.
Livability in small communities have played a nearly equal role in attracting new residents and homebuyers as affordable home prices have. Quality of life factors are drawing many Canadian homebuyers to small markets (40 per cent), slightly more than housing affordability (37 per cent).
“Despite the fact that the national housing market still has challenges to overcome, smaller communities are viable options for Canadian homebuyers looking for the right balance between liveability and affordability,” said Christopher Alexander, president of RE/MAX Canada, in the report. “The increase anticipated for home prices for the remainder of 2022 by our network of brokers and agents is a good indicator of the appeal of these communities.”
Prices in small Nova Scotia communities could see 20% growth
By the end of 2022, prices in some smaller Canadian communities will have seen double-digit growth.
RE/MAX Canada is projecting that home prices in Truro, Nova Scotia will rise 20 per cent by year-end to $361,557. In Q1-2022, average prices in Truro increased 46 per cent from Q1-2021, rising from $206,987 to $301,298. Between the same quarters, annual sales only rose one per cent, but are expected to climb 25 per cent by the end of 2022.
Following closely behind Truro, average residential prices in Halifax are anticipated to increase 19 per cent by year-end, having already grown 26 per cent between Q1-2021 and Q1-2022. Out-of-province buyers are driving sales activity in Atlantic Canada as they hunt for affordable homes compared to larger city centres in other provinces. RE/MAX Canada says its brokers and agents anticipate homes will continue to be sought after by outer-province purchasers and immigrants.
Ontario communities such as Oshawa, Carlton Place and Arnprior are expected to see their average home prices rise 15 per cent each by the end of the year, up to $1,204,873, $776,086 and $689,897, respectively. Affordability has also been a major factor in prompting out-of-town buyers to relocate in Ontario, especially in smaller communities that offer infrastructure and public transportation to commute to work in the city.
In British Columbia, Cranbrook and Kelowna will see the largest increases to their average home prices by the conclusion of 2022, rising 10 per cent and five per cent to $411,301 and $1,013,447. Over in Alberta, Brooks could record a 10 per cent increase in home prices this year, pushing the average to $344,296. While many Western Canada markets continue to welcome out-of-province purchasers, buyer confidence has improved, resulting in less urgency to purchase a home and fewer bidding wars.
28% of people living in larger markets would move to smaller one
Many Canadians have made the move to smaller markets, and more could be on the way.
According to a Leger survey commissioned by RE/MAX Canada, 23 per cent of respondents moved from a larger Canadian housing market during the pandemic to a smaller one. Eight-five per cent say that they are happy about their move, while 52 per cent of Canadians who relocated to a small town believe their mental health has improved after doing so. More than a quarter of people living in larger markets (28 per cent) say that they would like to move to a smaller community in the next two years according to the survey.
Financial support from family has been a key helping hand in getting Canadians into smaller property markets. The Leger survey found that a quarter (25 per cent) of respondents are using financial support from family in order to purchase a home. RE/MAX brokers and agents in 83 per cent of regions surveyed have also noted this trend at the local level.
The flexibility of working from home has allowed some home purchasers to access smaller real estate markets without the need to be close to the office. This trend doesn’t appear to be fading even as offices open up as COVID-19 restrictions are lifted. The ability to work from home has motivated 14 per cent of Canadians to move to a smaller community, and 11 per cent of those surveyed indicated that if their employer requires them to return to work in-person, they would look for another job in order to stay in their small community.
While the desire for small town living is high, local residents are feeling the anxiety of rising prices in their community. More than half (57 per cent) of residents in small Canadian real estate markets have voiced concern that the liveability qualities of their town “may be eroded,” from higher demand from move-over buyers. Forty-three per cent of those polled also shared the same anxiety about rising home prices and the potential for them to be priced out of their community.
